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Settlement Service Provider of list won't provide service, 10% Threshold?

The settlement service provider listed on my "Settlement Service Providers List" is an affiliate or subsidiary of my bank.  As it turns out they only do refi and not new home purchases. 

As such I had to look for a settlement provider on my own.  I shopped around for the best price, but even the cheapest one charges nearly 3x the amount for lenders title insurance and closing fees as is listed on my GFE.

I read this HUD document, and the bank needs to provide settlement service providers that are 'likely' to provide service which they did not do. 

The bank should know that the settlement service provider they directed me to, would not provide service on the loan.

Would this then fall into the 10% threshold requirement since I couldn't use a provider they recommended?  If not is there some other compensation I may be entitled to?

  • July 07 2013 - Washington
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Answers (4)

This is in the form that we send out.  Not sure since in your case the settlement company is affiliated with the bank, if you would still have a case.  You would think they should know what they can/can not do.


"To the best of our knowledge, the companies listed provide these services within the area of the subject loan property.  Should you find that they are unable to complete these services, please notify us immediately and we will be able to provide the name and contact information for another company."
  • July 08 2013
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Joe and Christine,

Thanks for the replies,  I am already tried negotiating a better price on the closing, unfortunately I am in Washington, DC and it is illegal to negotiate a a lower premium.  What makes that more frustrating, is I am buying the home from an investor so he bought title insurance 6 months ago and I have to buy a new policy now.

Anyway, on topic, what language do you use that would give the lender an out?  I want to look for it in my documentation.

I know this is a grey area since they didn't really ever give me a valid list of closing companies.

  • July 08 2013
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That is a great question.  Personally I think they should be on the hook since they really did not provide a Provider.  If I had to guess the loan officer clicked refinance instead of purchase when getting his title quote and did not think before sending out.

That being said, I just looked at our form and there is some verbage giving the lender an out.  Let us know how you make out.  My suggestion would be to let whoever is handing the title work close the loan.  They will probably do it best and at the most reasonable cost.
  • July 08 2013
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I believe it would.  You merely need to threaten to file a RESPA complaint and the lender should cover their error. 
  • July 08 2013
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